BILL ANALYSIS
AB 151
Page 1
( Without Reference to File )
ASSEMBLY THIRD READING
AB 151 (Jones)
As Amended January 26, 2010
Majority vote
PUBLIC SAFETY BUSINESS &
PROFESSIONS 11-0
(vote not relevant)
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| | |Ayes:|Hayashi, Emmerson, |
| | | |Conway, Eng, |
| | | |Hernandez, Hill, Nava, |
| | | |Niello, |
| | | |John A. Perez, Ruskin, |
| | | |Smyth |
| | | | |
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APPROPRIATIONS 12-0
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|Ayes:|De Leon, Ammiano, | | |
| |Bradford, Charles | | |
| |Calderon, Coto, Davis, | | |
| |Fuentes, Hall, John A. | | |
| |Perez, Skinner, Solorio, | | |
| |Torlakson | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Authorizes the Department of General Services (DGS) to
investigate the potential to sell, exchange, or lease any
portion of the Sacramento property used for Board of
Equalization (BOE) offices, and investigate and negotiate new
land and facilities for a BOE headquarters using the net
proceeds of the initial agreement. Specifically, this bill :
1)Requires further legislation authorizing DGS to sell,
exchange, or lease, any portion of the current BOE
headquarters.
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2)Prohibits DGS from disposing of the specified Sacramento land
and facilities that would be acquired as its new headquarters.
3)Makes legislative findings and declarations that it is the
intent of the Legislature, in the
2010-11 Budget Act, to transfer operating funds from BOE to DGS
to pay for DGS's actual reasonable costs incurred for actions
taken pursuant to this bill.
EXISTING LAW :
1)Authorizes DGS to plan, acquire, construct, and maintain state
buildings and property.
2)Provides for DGS to dispose of state surplus property, subject
to specified conditions and upon legislative approval.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor costs (less than $50,000) for DGS to conduct
the investigations.
COMMENTS : In 1993, BOE moved its headquarters into the 450 N
Street building as DGS's tenant and claims that it has since had
problems with water intrusion. The windows have continued to
pop open and require replacement. In addition, mold accumulated
inside the walls and spread into the BOE office space. Many BOE
workers have complained of health and safety issues. According
to BOE, the mold problem has resulted in approximately 75
workers' compensation claims, one omnibus lawsuit, and over 40
civil litigation cases against both DGS and BOE.
BOE has brought the mold problem to the attention of DGS, which
deems the 450 N Street building repairable and habitable. BOE
is contractually obligated to pay for any tenant building
improvements; consequently, BOE is fiscally liable for the
estimated $68 million in repairs in addition to their annual
rent of $10 million.
DGS projects a different estimate of the 450 N Street building
repair costs; DGS states that $15.5 million has already been
spent for water intrusion repairs to the windows and $10 million
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has been spent on mold remediation. They anticipate spending
another $8 million, for a total of $18 million, to complete mold
remediation by December 2010. BOE, however, lists an estimate
of $31.8 million for mold remediation repairs. DGS acknowledges
a substantial difference in estimates is due to the fact they do
not include BOE's estimate of $18.2 million for infrastructure
repairs because, it considers those routine expenditures. DGS
also states that repair requests can be submitted to the
Department of Finance (DOF) for additional funding.
Currently, DGS may look for another facility to house BOE staff,
but DGS needs legislative authority in order to find a new
tenant or dispose of the 450 N Street building. If BOE were to
exercise its option to move out of the 450 N Street building
today, BOE would still be obligated to pay DGS rent until DGS
finds a backfill tenant to occupy the building.
As a result of the increasing list of repairs that were not
anticipated at the signing of the initial lease agreement, DGS
has redirected BOE's mortgage payments towards repairs. This
means that while BOE pays $10 million a year for rent, $5.9
million of that amount goes towards paying bond debt (or
remediation); none of that is paid towards the interest that has
accrued on the 2006 loan. Meanwhile, BOE has outgrown the
building with 2,900 employees and moved a quarter of BOE staff
to a second temporary office.
In the meantime, DGS has been repairing the 450 N Street
building. After the initial discovery of mold, further
inspection revealed that the entire building was mold ridden.
DGS adopted a floor by floor method of systematically cleaning
the mold in the building. BOE staff who work on a floor that is
being cleaned are relocated to a "swing space," or another floor
that has been solely dedicated to temporarily housing displaced
BOE staff.
According to BOE, "As BOE is responsible for generating
one-third of the State's revenues, loss of productivity equals
lost revenue for the State. Based on the "swing space"
approach, BOE is estimating a loss of productivity of 111
personnel years at a cost of $8,325,000 in personnel costs
during the planned 18-month remediation period. As many of
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these positions are revenue generating, BOE also estimates a
revenue loss to the State of California of $22 million due to
the workload disruptions.
"Before DGS spends more money making repairs to the 450 N Street
building, state leaders should give very serious consideration
to a new headquarters building that would better suit the needs
of BOE, an agency that generates one-third of the state's
revenues. AB 151 would provide the BOE with adequate office
space in a new, consolidated location in the greater Sacramento
area that does not require paying significant costs for the
repair and maintenance."
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301
FN: 0003619